Nutter's Washington

Expiring Tax Laws: Provisions Never End-Extenders

One of the great yearly legislative tax games is the shenanigan surrounding the “expiring provisions” in the tax code. Congress enacts a provision in the tax code for one reason or the other but it expires after a year or two or three. In certain cases, it makes sense to have a short-lived law. However, there may be other reasons this stealth process takes place.

The most likely reason a provision is temporary is its budgetary impact. The revenue impact of a one-year tax credit, for example, is obviously much less than the 10-year impact. It is an illusion, of course. Ten year budget numbers can cause all kinds of procedural and political problems.

Income Tax Exclusions: Time to Look Again

The current political buzz and mantra of tax reformers is to expand the tax base. By expanding the tax base, the experts tell us will increase revenues and promote fairness in the tax system.  For most liberals this means to eliminate deductions, credits and along with raising rates. However, all of this begs the question is exactly included in income? Where is the starting point to make all the calculations for  gross income, to adjusted gross income to net income to taxable income to actual taxes paid?

It is no surprise that the tax code takes a very expansive view on what is income. Gross income in the foundation Section 61 of the Internal Revenue Code states that it includes "all income from whatever source derived”. How is that for legislative drafting! 

Election Outcome 2012: Let's Speculate

It is dreary and rainy in Washington DC today. Many of the streets in the downtown area are blocked due to the financial brain trust meeting of the World Bank and International Monetary Fund. The President is running around the country like a banshee screaming, “Pass this bill” and looking for something to tax. No one is listening. Congress cannot agree on passing disaster aid funds and money to keep the government open after September 30.

The Dow Jones Industrial Average has had a bad week. When the Federal Reserve was not being berated by Congressional Republican Leaders, it was inventing a new financial dance called the twist, which was panned, by the markets. Europe, whatever that is these days, is in deep financial turmoil. Now, there are worries about China. To add to all of this, the Australian dollars drastically declined in value yesterday or is it tomorrow over there already. It is enough to make a person curl up with a large box of cheap Italian wine and smoke a Roi-Tan cigar. (I wonder if they still make those Tipperillos anymore?).

Independent Contractors in Tax Sights Again on Worker Classification

There is a tax provision in the latest Obama plan I missed until I waded this morning into the details released by the Office of Management and Budget. It is entitled:

 Increase certainty with respect to worker classification.

 I love those guys who think of these things. It could have been titled, how to squeeze more money out of people or perhaps, let’s give another sop to Big Labor. (If Oil can be BIG, so can Labor) In any event, it is a serious issue but all kinds of independent contractors-which includes a wide range of jobs- should be wary.

Is Omaba Still Trying to Govern or Given Up?

President Obama has presented yet another economic plan to do I am not sure what. This, I think, is the third plan in the last 2 weeks but it confusing as they are all sounding rather empty, seem to drone on and meshed together.

Before getting into some of the details, having reviewed the substance, the rhetoric and the political landscape, it seems to me Mr. Obama has given up on governing. He has chucked it in. He is no longer interested, if he ever was, in trying to present credible leadership and sound ideas to improve the climate for the private sector to grow and provide job opportunities for the American worker. His plan, his remarks are all directed in his bid to be re-elected.

My reaction is not based just on the tax issue. I advocate a complete overhaul of the tax system to make it simpler, neutral and effective. Under my definition, it may be that some people will pay more than they are currently paying, tax expenditure will disappear, but there will be certainty, fairness and limits. However, none of that is the case in the material presented by the President.

Social Security: Help Me Understand, Liberals.

Social Security, known as the third rail in American politics, is front and center as not only a campaign issue but for being a culprit in the growing long-term deficit problem in the country. I am not going to “rail” against Social Security but I need some help in understanding it deity-like status.

 Liberals hold Social Security dear and untouchable. It is indeed a scared idol. I am not sure I fully get it. President Obama this past summer seem to be amenable to some minor adjustments in the indexes that increase benefits and maybe to increasing the eligibility age. I think he has always supported lifting the wage base. He has backed off those notions saying yesterday he will not support any changes to Social Security and does not view it as contributing to the deficit. A person could almost be blown over by the collective sighs of relief from the left.

More Taxes from Obama and More of the Same

The President released yesterday the explanation on how he suggests paying for his jobs program of $447 billion. No surprise here, it is all taxes and it is not just tax increases but tax increases that have been suggested before by the Administration and for the most part rejected by Congress in the past.

The President’s new taxes proposed are designed to raise $467 billion over a ten-year period but are not designed to take effect until 2013 where the “Stimulus Junior” program spends it money in the very short term. 

Grading the New Obama Jobs Plan

 

The following was featured on Marketwatch.com

http://www.marketwatch.com/story/grading-obamas-speech-barely-passing-2011-09-09?siteid=nbch

 

The political clans gathered last night to hear President Obama make a political speech in front of a Joint Session of Congress. The purpose of the address was to put forth his newest program to shake off the economic doldrums of the country. With the President shouting, “pass this bill”, Republicans all looked like Jabba the Hut while Democrats mindlessly applauded.

As a prelude to grading his plan, it is evident the country is beset with more than a few economic woes. Unemployment lingers above 9 percent. The Federal Government has taken on a Mount Everest of new debt and trillions more to come. Housing prices and markets in most areas are in the dumper. Interest rates are low but borrowing is difficult even as the banking system has been flooded with money by the Federal Reserve. Many companies have huge cash hordes but complain about business uncertainly and over regulation. In addition to the dire economic situation, the political process is almost broken and cheap, inane political rhetoric and acts rule the day.

Grading the Romney Economic Plan

Republican Presidential candidate Mitt Romney put forth a detailed economic plan for the country in a speech today in Las Vegas. He hopes his presentation gathers attention and translates into support on what is sure to be the number one issue in the election next year. The speech was typical political rhetoric peppered with some philosophy but was accompanied by 59 specific proposals in a later released 160 page document addressing a wide rage of topics including taxes, regulation, trade, energy production and government spending.

 The President will give his version on how to promote the American economy in a speech before a Joint Session Of Congress on Thursday. Indeed the timing of the Romney speech is meant to be compared with the President. Governor Romney will no doubt be criticized for not being bold enough or specific enough. However, there is a real difference here. Romney is merely a candidate and not President and his plan contains more than I have seen from the Administration since they released their Budget nine months ago. Mr. Obama has been a master of platitudes but it is time to not only give his specifics (finally) but also produce some results or the face the souring electorate in a dismal economy. 

Joint Session of Congress, Indeed

The President will address a hastily and badly requested Joint Session of Congress on September 8th. The purpose is to put forth his economic plan. The real purpose, of course, concerns his re-election. Joint Sessions of Congress should not be called just to give a speech on something that should have been done long ago. They are for things like some national emergency, some overwhelming concern, some big deal. Not the case here. 

We have seen and heard the plans and non-plans of President Obama. We can expect more of the same. Higher taxes, get the rich guys, take the money from big oil, and oh those corporate jets. Subsidize green energy, (Note to Administration: See the $500 million dollar loss on solar company loan guarantee from 2009 Stimulus money, one of the clean energy poster children-announced yesterday) more shovel-ready public works, help to this group and these supporters and that one, let's not forget our union friends. Infrastructure Bank? Come on, that can not be serious. Call me skeptical. The Administration does, however, have some worthy ideas that deserve consideration. I will wait on the substance to grade the plan.

In requesting to appear in a Joint Session of Congress, Mr Obama intends to protray himself as an aggrieved victim. It is part of the re-election strategy to blame the Republicans on all that ails the country. Of course, it could be his lack of leadership and old shop-worn government control ideas that may also be to blame but as the country has seen, it is always someone else's fault. In any event, I doubt this theater will cause Congress to act on his proposals, whatever they are. If he was really serious, he would have been working the past year with Congressional Leaders on solutions that really address the problems of unemployment, private sector growth, taxes, and massive deficits. 

Football anyone?